A class-action lawsuit is being launched against the Ripple (XRP) triumvirate — Ripple Labs, its CEO Brad Garlinghouse, and the subsidiary XRP II — for the alleged “unregistered sale of XRP to retail investors.” The development highlights the still ever-growing legal stakes in the fledgling cryptoverse.
Plaintiff: ‘A Never-Ending Initial Coin Offering’
Brought forth by Taylor-Copeland Law in San Francisco County Superior Court on behalf of XRP investor Ryan Coffey and “all others similarly situated,” the lawsuit alleges the defendants have violated multiple state and federal securities laws to the detriment of investors.
As attorney James Taylor-Copeland noted on his Crypto Law blog:
“The complaint alleges Defendants have earned massive profits in violation of state and federal securities laws by selling XRP to the general public, in what is essentially a never-ending initial coin offering. The complaint further alleges that XRP has all the hallmarks of a security and that Ripple tries to obscure its sales of XRP by doing so on exchanges rather than directly.”
Taylor-Copeland also went on to suggest that XRP investors who are potentially interested in joining the suit to “contact us with information about your investment losses.”
Garlinghouse Informally Responds Via Retweet
At press time, there was no official reponse to the suit on Ripple’s official Twitter account, which is not surprising as the process is still early on.
On the same day the suit was filed, though, Ripple Labs’ CEO Brad Garlinghouse did fire off a retweet of an Axios article entitled “SEC commissioner won’t declare all tokens are ‘securities.’”
In it, Axios correspondent Kia Kokalitcheva reported that “SEC Commissioner Hester Peirce isn’t yet ‘willing to make a blanket statement that everything other than Bitcoin is a security.'”
Garlinghouse’s implicit message is clear, then: the verdict’s still out on whether XRP is a security or not. Accordingly, that suggestion would appear to undercut the lawsuit’s allegation of securities law violations.
Bitsonline will keep you posted on the case as it develops.
The ‘Securities Question’ Lords Large for Now
Now, as Garlinghouse noted above, U.S. regulators haven’t publicly decided one way or another on the matter themselves yet.
But the Ripple class-action lawsuit does come at a time when paranoia about potential impending securities designations reaches an apparent peak in the fledgling cryptocurrency space.
We’ll have to wait and see what happens from here.
What’s your take? Do you think Ripple is a security or not? Let us know what you think in the comments section below.
Images via Twitter, Crypto Law, CNBC